China is leading the market in terms of device shipment. In addition to the market size, promotion of low-cost smart home devices by some consumer-focused Chinese companies is also a main driver.
The Asian smart home market will grow to US$26 billion by 2022, and the region will have the largest annual smart home device shipment, representing 43 percent of the global total, according to IHS Markit’s forecast.
Research institutes have concurred that the Asian region is poised to see the fastest growth in the emerging smart home market, thanks partly to the growing adoption in China, the second largest economy in the world. In addition, the populations in Japan, South Korea and Australia have grown more accustomed to smart home technologies.
“The main countries driving growth in Asia are China, Korea and Japan, due to the high penetration of other technologies such as the internet and smartphones, which serve as basic platforms to smart home market development,” said Liliana Alvarez Temix, senior analyst at IHS Markit.
China is leading the market in terms of device shipment. In addition to the market size, promotion of low-cost smart home devices by some consumer-focused Chinese companies is also a main driver, according to Jonathan Collins, Smart Home Research Director at ABI Research.
Japan and South Korea are catching this technology wave as local service providers, electronics makers and consumers themselves
Jonathan Collins,
Smart Home
Research Director,
ABI Research
are more willing to embrace smart home functionalities, Collins added.
Australia also has a lot of potential, thanks to its solid home security user base that is gradually transitioning to smart home users, as well as U.S. manufacturers’ entry into the market without investing huge effort in marketing/customer support redesign, Collins said.
Government policies are also at play. “Chinese local government is trying to build smart home communities. They have some policies that encourage real estate developers to include smart home features into their properties,” said Tracy Tsai, Research VP with Gartner's Personal Technologies team.
Japan and South Korea, on the other hand, have smart city initiatives that help to drive smart home adoption. The two markets have certainly created a degree of acceptance and seen more promotion for smart home devices as a corollary to smart city investment, Collins said. “Greater home and city connectivity provides a firm foundation for smart home functionality and appeal.”
Popular smart products in China
Devices that are getting popular in China include smart speakers, smart locks and air purifiers. Like how smart speakers gained traction in the U.S., a similar situation is happening in China. Alibaba’s Tmall Genie, Xiaomi Mi AI Speaker and Baidu Raven are some of better-known products.
Most uses cases, however, are still related to functional tasks like listening to music, alarm clocks, checking the weather, etc. Connecting to smart home devices are not common, because smart home device – even for lighting control, for example – are relatively expensive and also difficult to set up, Gartner’s Tsai pointed out.
Adoption of smart locks that can be controlled via mobile phone, card or password have also grown, thanks to the convenience they bring and rising demand by rental property owners who want to avoid the hassle of changing keys for safety reason.
With air pollution in some of the big cities, people are buying smart air purifiers which they can turn on remotely before arriving at home.
There are a number of smart appliances on the market. The issue is whether people will actually use the smart functionalities, Tsai said. “If you take a look at online retailers Taobao or JD.com, many home appliances like fridge and washer are already connected with mobile apps support. The issue is if user really uses it or not. But supply is a lot and so is the shipment.”
Smart speaker adoption to grow in Japan
A smart device that is gaining traction in Japan is smart speaker. Google, Amazon and Line all introduced their smart speakers in Japan in October 2017, and have invested much resource to promote their devices on TV commercials. Sonos also launched its smart speakers in the country earlier this month.
Today awareness of smart speakers among Japanese consumers could be as high as 90%, as big brands placed Japan as the new battleground for smart speaker sales.
Smart speaker ownership rate was pegged at 5.7% as of February 2018, according to Marketing Research Camp. However, with all the TV commercials, it is almost certain that adoption will increase, says tech media Voicebot.ai.
The markets of smart speakers and compatible smart devices are expected to grow over the next 2-3 years, even though common functions used today are music listening, news, timers and alarms.
The potential of smart home
Many research institutes have made bold forecast on the IoT or smart home market growth. The expectations are based on the sales trend already seen on some smart home products. Additionally, big brands like Amazon, Google, Apple, Alibaba and Trencent have all introduced self-made products for the market, which can result in more public awareness and penetration, IHS Markit said.
For now, higher cost is a common challenge for smart home markets in Asia. For example, in Taiwan, the cost of light switch on the wall that enables voice control and app control costs more than NT$3,000 (US$100) with installation, while the same can done at about NT$500 (US$17) for a regular switch.
The current smart home is also characterized by “fragmented devices.” Smart light switch, smart lock, etc. are all devices with “one specific purpose,” Gartner’s Tsai said. “The situation in Asia now is more like at a migration stage, where devices are getting replaced one piece by one piece.”
The devices don’t necessarily work cohesively to render total automation or a complete, immersive smart home experience. But this
Liliana Alvarez Temix,
Senior Analyst, IHS Markit
is essential before smart homes can become popular. Reduction in human interaction is very important, according to IHS Markit’s Temix.
In the future, the scope of smart home may go beyond appliance automation and become as popular as today’s smartphone. “The smart home will be the key interface for a range of industries looking to provide services to consumers,” says Collins from ABI Research. “It is not too stretched to consider the home as increasingly similar to the smartphone in its ability to integrate and service a wide range of ongoing services.”
“Home insurance, consumables re-ordering, security, maintenance and repair, cleaning, grocery selection and consumption, health monitoring, delivery, entertainment content and many more, could all increasingly depend connectivity into a smart home system to support new and existing customers,” Collins explained.
Through lower price points, improved functionality and better value proposition, smart home will become even more attractive to the consumers. This is why many businesses have dived in to provide smart product or service offering.